Question

In: Economics

Identify the different categories of market-based instruments and what are the pros and cons?

Identify the different categories of market-based instruments and what are the pros and cons?

Solutions

Expert Solution

The instruments that regulate behavior through market signals rather than using command and control are referred to as market based instruments. The market based instruments are of three types:

1. Price Based - These include user charges, emission charges, product charges, performance bonds, non compliance fees, subsidies , deposit refund system etc.

2. Rights Based - Tradeable permits, rights or quotas , offset schemes etc.

3. Market friction based instruments- These include education programs, research programs, labeling etc.

Market based instruments provide great flexibility and financial incentives to companies as compared to command system where companies loses motivation.This encourages producers to adopt new technologies and facilities to pursue better results to solve various environmental problems.

However, some of the disadvantages of using market based instruments include need of principles and regulations to guarantee its implementation but relevant values are not sufficient. Also some companies might not be motivated to take actions in the direction of innovation and thus market based instruments loses its relevance.


Related Solutions

Define Activity Based Costing. What are the pros and cons of this costing method? If identify...
Define Activity Based Costing. What are the pros and cons of this costing method? If identify and discuss an industry best suited for this costing method.
Discuss the pros and cons of creating shareholder value. Discuss the pros and cons of Market...
Discuss the pros and cons of creating shareholder value. Discuss the pros and cons of Market Capitalization, Discuss the pros and cons of market indexes market indexes such as the(Research each term via the Internet and determine which stock exchange they follow) S&P 500, The DJIA, DAX, CAC-40, NASD 1000, and the FTSE-100.  Finally, research and discuss the major differences between the New York Stock Exchange (NYSE) and NASDAQ.
Identify 3 pros and 3 cons of localization and standardization and explain why they are pros/cons....
Identify 3 pros and 3 cons of localization and standardization and explain why they are pros/cons. Give 2 examples of products that are better off with Standardization and 2 that are better off with Localization and explain why?
What are the different types of cash management accounts? what and the pros and cons?
What are the different types of cash management accounts? what and the pros and cons?
Identify solutions to the problem of Rhino poaching. What are the pros and cons of each?
Identify solutions to the problem of Rhino poaching. What are the pros and cons of each?
What are the pros and cons of different methods for improving the delivery of care within...
What are the pros and cons of different methods for improving the delivery of care within health care organizations?
What are the Pros and cons of projecting models to different times and/or places is SDM?
What are the Pros and cons of projecting models to different times and/or places is SDM?
What are the pros and cons of creating a single financial market in the European Union...
What are the pros and cons of creating a single financial market in the European Union for companies? Does it make sense for consumers and businesses? What are the pros and cons of the Brexit movement? How do you reconcile the issues raised in the article Brexit Could Leave Wedding Bouquets Stuck at the Border now that Theresa May's Brexit initiative has been voted down?
Identify the pros and cons of the united states healthcare system
Identify the pros and cons of the united states healthcare system
what are the pros and cons of trying to use a single brand-name in different markets...
what are the pros and cons of trying to use a single brand-name in different markets as opposed to creating unique brand names for various markets
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT